Compared with the entire foreign exchange transaction, choosing the type of foreign exchange order is a very small link, but choosing the appropriate type of foreign exchange order will make your transaction more effective.
Today we will introduce various order types in foreign exchange trading, including: market order, limit order, instant transaction, pending order transaction, GTC order and GFD order, OCO order and OTO order, etc., to make it easier for novices to understand foreign exchange orders .
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What is a foreign exchange order
First of all, explain the foreign exchange order. To put it bluntly, it is an instruction or "credential" for the foreign exchange trading service provider to execute the transaction. The order type is a way of how investors can enter or exit a transaction.
The important function of the foreign exchange order type is that it allows us to set up a plan in advance when trading. On the one hand, we can conduct transactions more rationally and efficiently, and on the other hand, we can take precautions against potential market risks in advance and prevent them.
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What are the types of foreign exchange orders
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There are some common order types that almost all forex brokers offer, and of course, there are some order types that sound a bit strange. Next, we will introduce the different order types for you.
At the price level, it can be divided into: market orders, limit orders, and pending orders.
1. Market order
This is the most common type of market where you trade with the market's current quotes.
The biggest advantage of a market order is that it is almost instantaneous, thus ensuring that the order is executed in foreign exchange transactions.
2. Limit order
That is, set a buy order at a point lower than the market price, or set a sell order at a point higher than the market price. When the exchange rate reaches the set price target, the order will be automatically triggered for execution, otherwise, it will not be executed.
Limit orders can be used to predict that the trend will turn after the market price reaches the set price.
3. Pending orders
It mainly means that the transaction is not based on the market order, but the order is fed back to the trader, and then the trader decides.
In terms of time, it can be divided into: instant transaction and pending order transaction.
1. Instant transaction
Place your order now, theoretically there is no time to delay.
2. Pending order transaction
Also known as a limit order, it means that a trader issues a limit order to allow brokers to buy and sell orders in the future according to the conditions predetermined by the trader.
There are mainly 4 types of pending orders, namely:
Buy limit order: A transaction request to buy, when the market price is equal to or lower than the price specified in the order. It should be noted that the current market price must be higher than the order price.
Stop loss buy order: A transaction request for buying, when the market price is equal to or greater than the specified price in the order. Note that the current market price is lower than the order price.
Limit sell order: A sell transaction request to sell when the market price is equal to or greater than the price specified in the order. Note that the current market price is lower than the order price.
Stop loss sell order: a sell transaction request, when the market price is equal to or lower than the price specified in the order to sell. Note that the current market price is higher than the order price.
Some special orders are mainly divided into: GTC orders, GFD orders, OCO orders, OTO orders.
1. GTC order
Good till canceled, the order will remain valid until it is cancelled. Your broker cannot cancel this order at any time. .
2. GFD order
Good For the Day orders are always valid until the end of the current trading day. Because the foreign exchange market is a 24-hour non-stop trading market, this usually means that after the New York market closes, the order will be automatically voided. However, we recommend that you confirm this with your broker.
3. OCO orders
Selective commission order (One Cancel the Other) is to bind the stop loss order and the profit order to ensure that when one of the two orders is executed, the other will be automatically voided.
4. OTO order
OTO order (One-Triggers-the-Other), OTO order is opposite to OCO order, it triggers another order at the same time when one of them is triggered. . When you plan to set profit and stop loss targets ahead of time, even before you place a trade, then you can place an OTO order.
To sum up, most forex traders use the basic order types, don't design your trading system to allow a large number of special orders to be executed. Keeping your order simple and easy to operate is the best strategy.
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